In the bond market, in normal times, we hardly talk about an indenture that speaks. But indenture becomes the go-to document if certain events take place, for example.B. if the issuer risks contravening a bond bond. The indenture is then closely monitored to ensure that there is no ambiguity in the calculation of the financial ratios that determine whether the issuer complies with the covenants. Bond markets, unlike equity or equity markets, sometimes do not have a centralized stock exchange or trading system. On the contrary, in most developed bond markets, such as the United States, Japan and Western Europe, bonds are traded on decentralized markets that are not traded. In this market, market liquidity is provided by traders and other market participants who use venture capital for commercial activities. When an investor buys or sells a loan on the bond market, the counterparty to the trade is almost always a bank or investment firm acting as a trader. In some cases, when a trader buys a loan from an investor, the trader carries the loan „in stock“, that is, he holds it for his own account. The trader is then subject to risks of price fluctuations.
In other cases, the trader immediately sells the loan to another investor. There are a number of bond indices for portfolio management and performance measurement, much like the S&P 500 or Russell indices for stocks. The most common US benchmarks are bloomberg Barclays US Aggregate (formerly Lehman Aggregate), Citigroup BIG and Merrill Lynch Domestic Master. Most indices are parts of broader index families that can be used to measure global bond portfolios or that can be subdivided according to their duration or sector for the management of specialized portfolios. When the memorandum of offer is drawn up before the sale of a loan, the indenture is usually summarized in the „Description of the notes“ section. This memorandum of offer, also known as a prospectus, is a document describing a financial guarantee for potential buyers. A prospectus usually provides investors with essential information about investment funds, stocks, bonds and other investments, for example. B a description of the company`s activities, annual accounts, biographies of senior managers and directors, detailed information on their remuneration, all disputes that arise, a list of essential characteristics and all other essential information. An EPS is similar to a Bond Indenture (or Trust Indenture), as both are contracts between an issuer and a company on the terms of a loan. While an EPS is an agreement between the issuer and the songwriter of the new issue, indenture is a contract between the issuer and the agent representing the interests of bond investors.
Indenture: Bond Indenture (also Trust Indenture or Trust) is a legal contract that is granted to lenders. In the past, coupons were physical attachments to paper loan certificates, with each coupon constituting an interest payment. On the due date of interest, the bondholder would transfer the coupon to a bank against payment of interest. Today, interest payments are almost always made electronically. Interest can be paid at different frequencies: usually semi-annual, that is: every six months, or every year. In finance, a loan is an instrument of the bond issuer`s indebtedness to holders. . .